We discuss the Ricardian equivalence, which suggests that an increase in government deficit today can be seen as a burden on individuals in the future. This is because the government will need to raise taxes to pay off the deficit, leading to a reduction in household consumption and an increase in savings. However, the large fiscal deficit is also one of the factors with negative effects on the economy, as it leads to a reduction in national savings rates and raises interest rates.
The Impact of Government Deficits on the Economy
https://youtube.com/shorts/nra07H5sr8g?si=0Fdc35tHM2XHbFjW
Leave a comment